Couldn't have put it better myself:
Powerful financial actors have done a great job at framing themselves as the solution to, rather than the cause of, the prevailing crisis. They have incessantly pushed the now-dominant narrative that more real estate investment is a good thing because it will increase the supply of much-needed homes. Blackstone, for example, claims to play a “positive role in addressing the chronic undersupply of housing across the continent”. But the evidence suggests that greater involvement of financial markets has not increased aggregate home ownership or housing supply, but instead inflated house prices and rents.
The thing is, institutional investors aren’t really into producing housing. It is directly against their interests to significantly increase supply. As one asset manager concedes, housing undersupply is bad for residents but “supportive for cashflows”. Blackstone’s president famously admitted that “the big warning signs in real estate are capital and cranes”. In other words, they need shortages to keep prices high.
Where corporate capital does produce new homes, they will of course be maximally profitable. Cities such as Manchester, Brussels and Warsaw have experienced a proliferation of high-margins housing products such as micro-apartments, build-to-rent and co-living. Designed with the explicit intention of optimising cashflows, these are both unaffordable and unsuitable for most households. Common Wealth, a thinktank focusing on ownership, found that the private equity-backed build-to-rent sector, which accounts for 30% of new homes in London, caters predominantly to high-earning single people. Families represent just 5% of build-to-rent tenants compared with a quarter of the private rental sector more broadly. These overpriced corporate appendages are a stark reminder of the market’s inability to deliver homes that fit the needs and incomes of most people.
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In recent decades we have been living through an ever-intensifying social experiment. Can housing, a fundamental need for all human beings, be successfully delivered under the machinations of finance capitalism? The evidence now seems overwhelming: no.
As investors have come to dominate, so the power of residents has been systematically undermined. We are left with a crisis of inconceivable proportions. While we can, and should, point the finger at corporate greed, we must remember that this is the system working precisely as it is set up to do. When profit is the prevailing force, housing provision invariably fails to align with social need – to generate the types of homes within the price ranges most desperately required. In the coming years, housing will occupy centre stage in European politics. Now is the time for fundamental structural changes that reclaim homes from the jaws of finance, re-empower residents and reinstate housing as a core priority for public provision.